Electricity rationing expected to reduce capacity in China
Power outages and electricity rationing in China is expected to reduce capacity, increase lead times, and increase costs from factories in China.
Manufacturers in China have reported that electricity may be rationed in the coming months. In some regions factories have been temporarily closed while in others they are subject to a 50% rationing of supply.
In practice this will mean higher prices and longer lead times. This will add to existing delays seen at Asian and US ports although that is expected to improve once China returns from the Golden Week holiday.
If you need to order from China in the next 3 months, make sure you discuss this with your supplier so that you have a clear understanding of the timelines. You may also want to explore US manufacturing alternatives as there is no guarantee that the volatility won’t continue through 2022.
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